Entrepreneurs wear a lot of hats, from managerial, leadership hats to innovative, “thinking-outside-the-box” type hats. Needless to say, the average entrepreneur is expected to be well-versed in a variety of disciplines in order for their ideas and business concepts to succeed in today’s competitive markets.
While most entrepreneurs seem to take on their business and creativity roles a little more frequently, business building experts advise young entrepreneurs spend more time understanding the many nuances of business law as a way to be prepared to establish new businesses.
Understanding the legal rights, responsibilities and liabilities of businesses isn’t a luxury entrepreneurs can just decide to adhere to. And that’s especially true in today’s increasingly borderless world that allows people to do business a world away.
To avoid legal liabilities or lawsuits, business owners and entrepreneurs need to be versed and up-to-date with all the local rules and regulations in any country they plan to do business in. Entrepreneurs first starting a new business should ensure all necessary permits, licenses and paperwork are on file in the jurisdictions they are doing business in.
Author and entrepreneurship public speaker Donya Zimmerman also notes that it’s important to find allies on the ground when establishing a business in any new city or country.
“It is good to hire a local business attorney in that particular country, to ensure that you are not violating any laws or committing any illegal activities,” she explains.
For Entrepreneur Magazine’s Cameron Benson, understanding loans and cash flow is the most important business law lesson. Knowing that a new business may take months to turn a profit is incredibly important to build a feasible funding model.
Benson suggests looking into a variety of funding strategies, including SBA loans, investors, friends and family and even crowdfunding.
“The art is not in making money, but in keeping it, so, once you have money coming in, be sure to reinvest it into your business,” writes Benson. “This can occur in many different forms, such as marketing, hiring staff, business development or even reinvestment in yourself.”
But, it should be reiterated – business law isn’t only designed to protect consumers and clients, it’s also tailored to protect businesses and business owners. Understanding how to use law to safeguard a new company is one way to strengthen the chances that the business will survive its first years and even thrive. It will also help prevent legal issues down the road.
Professor Dana Collette teaches business law at Vancouver Island University (VIU) in Canada and is quick to reinforce why entrepreneurs should have a broad understanding of business law before they even build a business plan and even before they officially select a name for their company.
“It’s important for entrepreneurs to have a good understanding of business law issues that are relevant to their area” says Dana Collette. “For example, entrepreneurs should be aware of their intellectual property rights, and how best to protect those.”
In recent years, there has been plenty of public intellectual property battles in a range of different industries. For entrepreneurs who utilize collaborative technologies or who have invented their own technology, legally protecting their product is paramount.
As a business begins to grow, knowing the law around employment is especially important, as Dana Collette also notes. “Employment law is a significant area for entrepreneurs who will hire staff,” adds Collette. “This is a heavily regulated and legally sensitive area that requires a solid understanding of the law.”
Finally, in today’s high-paced, rapidly-evolving digital world, entrepreneurs should have a close relationship with a business lawyer who can vet and draw up contracts and who can give trusted guidance as legal-related questions and issues arise.
